From the March 2000 issue of Entrepreneur

When Sandra Hand, vice president of Virtual Voice corporation at the time, took the phone call that would ultimately lead her to walk away from the voice-messaging company where she'd spent 10 years of her life, her first thought was, "I'm pretty happy here."

But on the other end of the phone line was Dylan Marer, an entrepreneur's entrepreneur blessed with a gift of persuasion that makes Johnny Cochran look like a piker. The 32-year-old Marer had already launched one successful company, the $4 million Los Angeles-based Innovative Meetings and Events, and needed Hand to roll out his latest venture, BodyLogix.com in August 1999.

Marer wanted BodyLogix.com to crash the fledgling women's alternative health and exercise market with a bang, grabbing market share and creating a brand name in an industry that didn't have many. The key was getting people like Hand on board to steer the company out of port and guide it through the choppy seas of e-commerce. Good plan. But why would anyone with a modicum of sense leave a big, established company for a newer, smaller one with a risky future?

"I don't buy the notion that we're a small company or a new company," says Marer, who expects BodyLogix.com to bring in $38 million this year, "but I understand some people do. I think you can attract top people to a newer or smaller business by doing two things: paying them well and appealing to their sense of adventure. And that's what we did with Sandra."

For her part, Hand thought things were getting a little stale at her own job, and she was at a point in her life where she felt like taking on new challenges--not that she didn't want some guarantees first. "I'd be lying if I said money isn't a factor in going to work for a small company, especially a dot.com," she explains. "But we spend so much time at the office that you realize you want to be in a place you enjoy and where the work really challenges you."

Lured by Marer's offer of a healthy chunk of equity in BodyLogix.com, and by the company's cutting-edge concept, Hand agreed to climb aboard as Marer's new executive vice president. "When Dylan first approached me to come work for BodyLogix, I was intrigued by what the company would be doing and excited about the idea of slugging it out in the e-commerce market," she says. "As an executive, you want the money, you want the challenge and you want the opportunity to get involved with a company that has great long-term growth potential. When I looked at BodyLogix that way, it was actually a pretty easy decision to make."

Hotshot execs moving from stronger and more established companies to smaller, more nascent ones may not be a new concept, but it's one that's attracting more attention these days. Eyebrows were raised all over Wall Street last year when Lou Dobbs, president of CNN Financial News, left his high-profile job and moved over to Space.com, a space-travel and astronomy Web site with a much lower profile. Dobbs told reporters that space travel was his first love and he wanted to spend the rest of his working life up to his elbows in it.

Neither Hand nor Dobbs is alone in taking on new risks. Today more and more corporate heavy hitters are foregoing the showroom-floor-sized corner office and reserved parking privileges for the relative uncertainty of 70-hour weeks at shoe-box-sized offices where they may have to fight for prime parking spots with the rest of the staffers.

How are small businesses attracting such talent? Good financial packages--usually with a piece of the company included--big-time titles like CEO or COO, and a Braveheart-like call to arms that appeals to the Mel Gibson in most corporate big shots.

"I recently hired one of the highest-ranking executives in my industry," says Scott H. Korn, the 37-year-old founder, chairman and CEO of York Paper, an $80 million Eddystone, Pennsylvania-based paper-products company. "It took a heck of a lot to get him--enough equity in the company where he's set for life--but what sold him on us was the idea that he'll have as much freedom and flexibility as he can handle. As long, that is, as he produces."


Brian O'Connell is a Framingham, Massachusetts, freelance business writer who aspires to be a big-shot executive, or at least be married to one someday. His most recent book, Generation E: How Young Entrepreneurs are Changing the Corporate Landscape (Entrepreneur Press), was released in September 1999. He can be reached at Bwrite111@aol.com

Give 'Em What No One Else Can

While there's no lack of good executives looking for better deals, prying them from their existing jobs is not easy.

Some business owners find they have to give up more and more to lure talent away from the big guys. All the good executives are taken, it seems, and most are getting rich on stock options in the long-running bull market. One entrepreneur tells the story of wooing a big-time chief technology officer during a frenzied two-week period. Just when the business owner was set to reel her prize catch aboard, the executive's company announced it was going public, increasing the CTO's stock value by 75 percent overnight. Needless to say, the executive stayed right where he was.

In a sparkling economy, high-end recruiters say small companies have to be creative in landing the big fish. When pitching to potential management hires, it's a good idea to play the vanity card and let them know they're highly regarded in your industry. Then emphasize how likely it is they'll grow stale unless they take on greater risks.

When you do talk money, frame it in the context of a long-term deal so you'll have their talents on hand for a while. "It's got to be a long-term relationship, and you have to let them know up front," says Korn, who signs his top executives to big multiyear deals. "I try to stretch it out to 10 or 20 years so I know we're both in it for the long haul."

Don't be reluctant to embellish your company's freewheeling image. Smaller companies offer more flexibility and variety for new hires, who may feel stifled in their current jobs. "We try to match our company to what the executive does," explains 36-year-old John Mueller, owner of Idea Factory Inc., a $3 million bath-products company in Menomonee Falls, Wisconsin. "If we see a candidate who's tired of wearing a power suit, we let that person know we're a T-shirt-and-blue-jeans company. It sounds simplistic, but you should see the smiles on their faces."

Other entrepreneurs, recognizing that time is as big a commodity as cash, tempt would-be managers with flextime schedules and amped-up vacation packages. "Good people are used to having leverage," says 31-year-old Kristin Knight, founder, president and principal of Creative Assets Inc., a $14 million creative-recruitment company in Seattle. "So they expect the stock options and the big raise. Where you can beat the competition is on the time issue. If it takes an extra two weeks of vacation time to get them in your shop, then do it."

On-site perks don't hurt either, Knight adds. "We began having on-site masseuses to keep people happy."

Don't Let The Dot.com Faze You

As Sandra Hand's story at BodyLogix.com attests, top executives' eyes widen at the thought of working for dot.com companies. That's partly because there's always the chance they might earn more money than a Saudi oil sheik when the company goes public and partly because of the thrilling idea of riding in the front car of the fastest roller coaster around. The combination of cash and cachet can't be undersold. After all, there's a little Las Vegas in everyone.

"It's so easy to get caught up in the Web initial public offering craze," notes Ethan Winning, a Walnut Creek, California, expert on business growth trends and the author of the self-published book Labor Pains: Employer and Employee Rights and Obligations. "Everyone wants to work for the company that's going to become the next Yahoo!. That's fine if you're an owner of a small e-commerce business--trump that side of the mix all you want when you're recruiting.

"If you're running a non-technical company, you're not competing against the dot.com companies. Let them fight it out for themselves with the big signing bonuses and fat financial packages. You don't have to play that game." Even though the media plays up successful tech IPOs, most Internet stock IPOs never pan out. After all, more Internet start-ups fail than succeed. Non-Internet companies can compete with options like extended flextime and generous vacation packages.

Signing bonuses can do more harm than good in small companies, says Winning. Information in small businesses flows like beer at a frat party, and resentments can grow if too much of a company's money is targeted toward one individual. "Adding signing bonuses to the package is bad business," Winning explains. "If you give bonuses out, then you're going to have some disgruntled employees stewing about who didn't receive such a bonus. I tell the business owners I talk to, `Decide how much you can afford to pay in salary and stock options, and then walk away if a candidate wants all that and a bonus, too.' "

Another advantage an established small business has over start-up dot.coms is a track record. Management candidates can ask around and get a feel for your company. That's a big advantage when dealing with talented executives who don't like surprises. "One of the most important considerations for hiring top talent is your company's image," says Winning. "And more often than not, that image is conveyed by your current employees. If your employees speak highly of your company, and the management is involved with their employees' happiness and success, you have a better shot at landing a big recruit."

Workplace culture manifests itself in many forms. At Incentive Systems, an $8 million enterprise incentive compensation management firm based in Burlington, Massachusetts, the company's founder and CEO, Elizabeth Cobb, has bagged her share of top managers. On one day alone, Cobb landed a new CFO and a sales-and-strategic-alliances director. Her company's chief architect and co-founder was a lead developer of Lotus 1-2-3 and her new CTO developed the PowerSite Web software package at Powersoft. "In such a short time, we've succeeded in building a formidable team," explains the 46-year-old Cobb, who rolled out her company in June 1997.

Cobb, the first woman to run Honeywell's advanced engineering training program back in the 1970s, when female engineering directors were about as rare as Rush Limbaugh sightings at a hemp rally, credits her recruitment success to her company's motivation-based management techniques. "Recruiting top talent is at the heart of good business," she explains. "And getting good help is the same as getting new customers: You've got to motivate them."

Cobb believes the carrot-and-stick approach is the best way to attract new managers. But don't just dangle the carrot in front of their noses, she adds--let them grab it, taste it and ask for more.

But you're also trying to get job candidates to do the same things you want customers to do--buy into your company mission, Cobb says. "You've got to bend a lot to fit people's lifestyles into your system, but if they buy into what you're doing, the rest comes naturally."

It's What's Inside That Counts

A mistake many business owners often make is to grab executives simply because they had a fancy title at their old jobs. Just because somebody has "CTO" on their coffee mug doesn't mean he or she's a Mensa candidate. "You have to do your homework and do it thoroughly," advises Stever Robbins, an executive coach at VentureCoach.com, an entrepreneurial coaching firm based in Cambridge, Massachusetts. "I've seen managers with big titles who were complete idiots. What happened was their high school buddy who made it big hired them and gave them a big title. But when you look a little closer, you find the owner didn't necessarily give them a great deal of responsibility."

In a tight executive job market, perhaps that's the strongest lesson of all. You can toss money around, you can jack up vacation times and you can even hire a masseuse--but if you pick the first big title you see and don't do your homework, you're going to be spending more time with that masseuse than anyone else on your staff.

Contact Sources

Christian & Timbers, http://www.ctnet.com

Creative Assets Inc., http://www.creativeassets.com

The Idea Factory, (800) 867-4673, john@ideafactoryinc.com

Incentive Systems, http://www.incentivesystems.com

Ethan Winning, (800) 823-6366, http://www.ewin.com

York Paper, (800) 416-YORK, http://www.yorkpaper.com